French economy back on track for solid growth

28th September 2006, Comments 0 comments

PARIS, Sept 28, 2006 (AFP) — The French economy will see solid growth this year, official data showed Thursday, a day after the government unveiled an optimistic pre-election budget.

PARIS, Sept 28, 2006 (AFP) — The French economy will see solid growth this year, official data showed Thursday, a day after the government unveiled an optimistic pre-election budget.

In the second quarter of this year the economy expanded by 1.2 percent, a final assessment by the national statistics institute INSEE showed.

The figures mean that gross domestic product (GDP) is certain to grow by a minimum of 1.9 percent for the year even if there is no further growth, provided the economy does not shrink.

The government has predicted growth of 2-2.5 percent.

The second-quarter figure was a final assessment by INSEE, which in late August had estimated that growth from April to June was 1.1 percent.

Nicholas Bouzou, of finance house Asteres, said the INSEE figures were a sign that "the situation is not optimal in so far as (they) show that the French economy depends on domestic demand, which itself is drawn from debt, but suffers from a lack of international competitivity".

Economists polled by the AFX financial news wire had predicted the second-quarter figure to stay unchanged at 1.1 percent.

INSEE revised downwards the first quarter's GDP growth to 0.4 percent from a previous 0.5 percent.

Imports of goods and services in the second quarter grew 3.2 percent. First-quarter imports grew 1.4 percent, revised upward from 1.2 percent.

Export growth in the second quarter was 1.6 percent. First-quarter exports grew 3.2 percent, revised downward from 3.4 percent, INSEE said.

Gross capital formation in the second quarter increased 1.7 percent, faster than the earlier estimate of 1.5 percent, while total domestic demand in the second quarter increased 1.7 percent.

France's draft 2007 budget unveiled Wednesday said the country was heading for economic growth of 2-2.5 percent next year, improved public finances and job creation.

The centre-right government of Prime Minister Dominique de Villepin has put reducing high unemployment and France's burgeoning public debt at the heart of its political agenda, together with efforts to boost consumer buying power.

The draft budget was the last before presidential elections expected in April and May next year. Nicolas Sarkozy for the centre-right and Segolene Royal of the Socialist party are currently the front runners to compete to replace Chirac.

The budget projections showed that the French public deficit would fall to 2.5 percent of gross domestic product in 2007 from 2.7 percent this year and within the EU ceiling of three percent.

The public debt would fall to 63.6 percent of output next year from 66.6 percent in 2005, owing notably to money from privatisations and the way the flows of national finances were managed.

Powered by growth of 2-2.5 percent next year, the same expansion as forecast for this year, a total of 250,000 jobs are predicted to be created.

The draft budget has been submitted to parliament and must now be approved by lawmakers before being signed by the president.

Copyright AFP

Subject: French news

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